Doha, August 11 (QNA) – Oil prices have been rising for nearly three months, despite healthy supply levels. QNB Group explains that the rise has been the result of a range of factors. These include geopolitical risk concerns, local supply dynamics and less pessimism about the US economy.
Prices were high during much of the first quarter of 2012, when the benchmark Brent crude traded close to US$125/barrel. Prices eased in April, and then slid substantially in May and June, to a low of US$89.
This slide was driven by concerns that opposition parties would win an election in Greece. The market feared that such a result would lead to the country exiting the euro, damaging confidence in the single currency and potentially sparking a recession in the region which would reduce its oil demand.
At the same time, there were signals of economic deceleration in key emerging markets, such as India and China, responsible for much of world oil demand growth.
Prices began to rebound soon after the Greek election on June 17th, as the market s fears were not realised. The rebound has continued since then, with a few brief corrections, despite a stream of negative economic data and concerns about Spain s banks and its indebted regional governments.
In early August, the market has been buoyed by fresh hopes the European Central Bank will ease the Eurozone debt crisis by buying government bonds. In addition, stronger than expected job creation in the US has been interpreted as a sign that the economy may be recovering, although unemployment remains at 8.3%.
